Oil rises, products find support from Hurricane Sandy

Brent crude futures edged higher on Thursday after seven straight sessions of losses, as the threat of Hurricane Sandy to East Coast gasoline and heating oil supplies lifted markets.

Gasoline led the oil complex higher, standing up more than 2 percent in afternoon activity, and heating oil also rose as Sandy churned northward. Expectations of heavy snowfall in the Appalachians, and the possibility refineries along the coast could face disruptions helped drive prices.

"It's a combination of the products finding some support after being hit hard and Sandy looks to make a direct hit in the Northeast, so it's very possible New Jersey and Pennsylvania refiners might engage in some prevent defense and slow or shut some operations," said John Kilduff, partner at Again Capital LLC in New York.

Brent was on track to break its longest losing streak since July 2010, but remained on pace to post a weekly loss. Prices have been dragged lower by rising U.S. inventories, an expected return of production from the North Sea's Buzzard Oilfield and continued uncertainty surrounding Europe's debt crisis.

Further support came from British government data showing gross domestic product rose 1.0 percent in the third quarter, beating forecasts for a 0.6 percent gain after GDP contracted 0.4 percent in the previous quarter.

Oil prices struggled to hold gains throughout the day, with traders digesting mixed U.S. economic data. Concerns about the impact of the struggling economy on fuel demand have weighed on prices in recent weeks.

Initial jobless claims fell last week, supporting oil prices, but the four-week average was up. Durable goods orders were up more than expected in September, but excluding defense and aircraft, were unchanged.

The durable goods figures supported the view that companies are holding back investments because of fears the U.S. Congress will fail to avert sharp tax increases and spending cuts in 2013.

"The market is still struggling because of the high inventory numbers and the weak demand, even with the better economic data," said Phil Flynn, an analyst at Price Futures Group in Chicago, referring to weekly U.S. inventory data released on Wednesday which showed a steep rising in crude oil stockpiles.

The market was also watching the resumption of North Sea oil flows in XXX that had been disrupted by maintenance and geopolitical risks in the Middle East which have supported prices for direction.

European Union(EU) foreign policy chief Catherine Ashton has agreed to discuss future steps in talks about Iran's nuclear program with Tehran's chief negotiator, a spokeswoman said on Thursday. It would be the first contact between Ashton, who represents six major powers in talks with Tehran, and Iran's Saeed Jalili since EU governments imposed new sanctions on Tehran in mid-October.

Syria's army command also announced a ceasefire on Thursday to mark the Muslim holiday of Eid al Adha, drawing back the perception of geopolitical tensions in the Middle East.

Still, some forecasters said prices could ease in the fourth quarter, with ABM Amro Commodity Research predicting Brent prices could dip to $100 a barrel by the end of the year, although it added prices would average $110 for the year.

"With early elections in Israel (Jan. 22), the immediate threat of an escalation between Israel and Iran is pushed back towards the spring/early summer in 2013. (Therefore) a lower risk premium could be seen in the near term," ABM Amro said in a research note.

(Reporting by Robert Gibbons in New York, Alice Baghdjian in London and Manash Goswami in Singapore; Editing by Peter Galloway and Alden Bentley)